Car insurance is something that concerns everybody, due to laws governing the need to have the service. Despite the legal necessity, however, few people fully understand how car insurance works or the best way to obtain suitable protection without breaking the bank. Unlocking the most frequently asked questions about car insurance can help you get the best deal possible.

Why Do I Need Car Insurance?

Every driver or owner of a vehicle is legally obligated to carry some type of car insurance. The exact parameters are determined by the laws of each state. The state that you reside in and where the car is located determine what types of car insurance policy you will need to carry. The requirements are different for Utah and New York, for example. However, regardless of where you live, not having any car insurance coverage will leave you in violation of the law and subject to prosecution.

What Happens If I Don’t Have Car Insurance?

Again, this depends on what state you live in. However, all states have laws in place to discourage drivers from operating a motor vehicle without insurance. Penalties vary from fines, having your driver’s license revoked, impounding of the car and sometimes, even possible jail time. Hopefully, these consequences are imposed when you are merely pulled over and cited for being uninsured. If you actually cause an accident, harming property or people, the laws will probably be applied more severely

How Do They Know I Don’t Have Insurance?

In most cases, the information is freely available in a public database that law enforcement can tap into. Once they have access to your license plates, such as would be the case if you’re pulled over or otherwise cited, they can match that plate number with records from the local Department of Motor Vehicles. Car insurance companies communicate with the DMV, so this information is readily available. Also, even if your state doesn’t maintain this close connection with the DMV, you are always required to carry a valid insurance card with you and present it to an officer when asked.

How Much Insurance Do I Need?

Different states stipulate what the lowest legal minimums are for car insurance policies in the state. Some states only require a basic liability policy to be purchased. This will provide protection against other drivers and property should you cause an accident. Some states, however, add certain requirements such as coverage against uninsured drivers and what is known as PIP, or personal injury protection. This provides immediate cash payouts to cover injuries and hospital bills caused in an accident, regardless of responsibility. The legal requirements are set by each state and are available through insurance providers or can be accessed in each state’s codes.

Who is Covered By My Insurance?

The owners and drivers of all covered vehicles are considered covered under your insurance policy, as well as any direct family members who have access to the car. Insurance providers encourage you to add all regular and licensed drivers to the policy directly and failing to do so can impact your ability to make a claim. However, anybody who has permission to drive the car is considered covered, even if you are letting a friend operate the vehicle for a day when an accident happens. There are exceptions if your vehicle is stolen- the unauthorized driver is not covered under any policy parameters. Your car itself may be covered, depending on the type of policy you have.

Explain Liability, Collision and Comprehensive Coverage

Liability insurance is the minimum coverage required by most states. If protects other drivers, vehicles and property against the damage caused by an accident that was your fault. The injured party will be paid by your insurance policy for the damages.

Collision coverage provides you protection if your car is in an accident, regardless of who is at fault. Whatever the situation, your collision policy will pay to have your car repaired or replaced.

Comprehensive coverage also protects your car. However, it isn’t necessary for there to be an accident to receive compensation. The policy kicks in whether damage is caused by weather, fire or even theft.

Full coverage is another term often used and is usually a policy that includes all three types of coverage discussed above rolled into one insurance policy that covers almost all possibilities. If your car is under a bank loan, you will likely be required to carry a “full coverage” insurance policy to protect the bank from losing their investment.

How Can I Save Money on Car Insurance?

There are many ways to save money of your car insurance. Your driving record, for example, has a direct impact on how much you pay. Your regular driving habits also come into play, with people who are on the road more receiving a higher premium than those who have more casual driving habits. Things like age and grades can also affect the premium, especially if you have drivers on your policy who are young. In addition, where you live either lowers or increases premiums; living in a higher traffic area, for example, leads to more risk and greater policy costs. Finally, it’s always a good idea to adjust your policy on a regular basis. Asking for discounts frequently can open up avenues of saving that you may have overlooked, while comparing prices can lead to a better deal on insurance.

Do I Need SR-22 Coverage?

SR-22 coverage is special car insurance that is issued to drivers who have moving violations involving impaired driving. In most states, an impaired driving charge or conviction is publicly reported via state records. You may be legally required to inform your insurance provider and live with the consequences. Some states, however, don’t have laws in place that make you let your car insurance provider know what has happened. If they pull your driving record for any reason, they will certainly notice and charge a higher premium, however. It is important that you know what your state law is if you have had an impaired driving violation. It is probably advisable to consult your attorney as well. The legal limitation for impaired driving also varies, depending on state law and the policies of your insurance provider. Impaired driving can follow you around from between three and ten years.